do in certain commodities and some you can't. That is just one of the risks that, God bless you, you have as a free enterpriser.

Mr. DEAN. I appreciate what you said about the new program. We think it is a good program, too, because it puts the emphasis back into private trade. It puts competitive forces at work.

Mr. MILLER. I agree with you, Mr. Dean, it is a wonderful program. I think it could be-I suggest, sir, first, when I said that we are grateful for it, that we appreciate it, and thank you so much. I frankly said I believe that there could be some improvements made in it that would help facilitate two things:

One, the disposition of your surplus; and, second, the saving of the rice mills.

I don't believe that it is generally understood, the terrific plight that the rice mills are in today.

It is one thing to express your sympathy after they drop dead. That won't revive them. It is another thing to do something for them before they are quite gone.

I think, frankly, that some of them are definitely in the throes of their dying agonies, as financial institutions at the present time, and I believe that is going to be a terrific loss to this country to see them go.

Therefore, if something could be done-and I am not, our company is not in the throes of bankruptcy-I assure you that Comet Rice Mills is doing reasonably well under the circumstances under which it has to exist, but I am concerned with other rice mills because no one can do well in an industry that has many sick members. That illness is contagious. It has contaminated all of the rice-milling operations.

So I simply say, thank you for what you have done; we are grateful for that; we ask respectfully if this won't work, would you be willing, please, to consider perhaps working out some ways to make it a little easier.

We don't ask for any-we don't ask you to give us anything. We don't want any subsidies. We don't want any help or support. We just would like some way of having a basis on which we can buy so that we can go and make sales.

Mr. DEAN. We are always happy, as you well recognize, to look at any industry recommendation.

Mr. THOMPSON. We seem to be in the phase of the problem that is a little new to me as chairman of this subcommittee.

I wouldn't be a bit surprised but what at some stage of the game we ought to take this subcommittee to some central point in Texas or Louisiana or Arkansas or somewhere and hold some hearings on this very thing. I take it that the Department would come along on those hearings and sit in on them.

Mr. McLAIN. Of course, we respect the problem. This applies not only to the rice-milling industry, but we hear much the same problem with the flour-milling industry. They have had casualties, as you recognize.

Mr. THOMPSON. I will discuss it with Mr. Miller when we get away. I have just one question I wanted to ask. You heard me ask Mr. McLain the $64,000 question, namely, what would be his personal reaction to freezing the acreages as they are now, this year, and eliminating the escalator clause. Eliminating the escalator clause would leave the floor at 75 percent, would it not?

What do you think, speaking only for yourself, and not committing anybody else, what do you think would be the reaction in the industry? Mr. MILLER. Let me answer that question two ways.

First, as far as I am personally concerned, I think that such a move would be generally beneficial.

Now, answering the question as to the reaction in the industry, I must say I think that would be mixed. I think that there would be those who would be on one side and those on the other, but I believe that generally speaking such a move would be well received by a majority of the people in the rice producing and processing activities. Mr. THOMPSON. I think it ought to be submitted to them.

Mr. Gathings.

Mr. GATHINGS. Who would be on one side and who on the other, Mr. Miller?

Mr. MILLER. That is a purely speculative thing, Congressman. I think that the people whose sole interest was in raising rice would naturally want the highest support price that they can get.

After all, rice is supported at a level higher than the world levels pricing in the United States.

Mr. GATHINGS. How much?

Mr. MILLER. Well, sir, when I was in the Orient, it seemed to me that our prices at that time were substantially, almost twice, the world prices; that we would have to sell rice at almost half of what those prices were at that time.

Mr. GATHINGS. Has there been a change since then? That was almost 2 years ago, I believe.

Mr. MILLER. That is right. As Mr. McLain pointed out, or Mr. Dean, one, I believe Mr. Dean said the world price market is a nebulous thing. It varies from place to place. I have some prices here that Japan pays one price for rice to Taiwan, Formosa. They pay a different price for comparable rice to other countries because of other trade relationships.

For instance, they said in Japan that they had to pay Taiwan, Formosa, at one price because Taiwan bought fertilizer from them. If they didn't pay Taiwan, Formosa, this price for rice. Taiwan would quit buying their fertilizer and they had to sell their fertilizer to keep their trade balance with Taiwan.

Mr. GATHINGS. No set rule for rice pricing in world?

Mr. MILLER. From day to day, I think the price of rice varies to some extent in the world market. It varies from country to country. Some countries like one kind of rice. For instance, the Japanese prefer zenith and pearl type rices and they will pay more for that than they will for long grain, but in this country, and I would like for the record to show that, and Mr. Dean nods his acquiescence in that statement, yet in this country we support the long grain rices at a higher level than we do the short grains because we consider here generally the long grain the more desirable type of rice.

Mr. GATHINGS. I think you are right.

Mr. MILLER. So the world market is a nebulous thing. The world market is what you can get for rice today.

Mr. GATHINGS. Mr. Miller, that is going to be working against the grain with a lot of producers, though, if we are going to arrive at a program whereby we would come up with a competitive plan for rice

STATEMENT OF CLARENCE L. MILLER, ASSOCIATE ADMINISTRATOR, COMMODITY STABILIZATION SERVICE, UNITED STATES DEPARTMENT OF AGRICULTURE; ACCOMPANIED BY J. E. THIGPEN, DIRECTOR OF OILS AND PEANUT DIVISION, COMMODITY STABILIZATION SERVICE, USDA; JAMES W. MERRILL, CHIEF, PRODUCTION PROGRAM BRANCH, OILS AND PEANUT DIVISION, CSS; W. K. SCHOONOVER, ATTORNEY, OFFICE OF THE GENERAL COUNSEL, USDA; AND RICHARD B. BRIDGFORTH. ASSISTANT DEPUTY ADMINISTRATOR, COMMODITY STABILIZATION SERVICE, USDA

Mr. MILLER. Yes, sir.

Mr. Chairman, we have a short prepared statement of one and a half pages.

Allow me to introduce to you those who are with me [introduces associates].

Mr. MILLER. I will read this brief statement and then these other gentlemen and I will fill in with the technical aspects and answers to any questions that you may have to ask.

Mr. MCMILLAN. All right; you may proceed.

Mr. MILLER. Mr. Chairman, in response to a request from Congressman Matthews, of Florida, the Department has previously taken the position of favoring enactment of the amendment to section 358 of the act as proposed in H. R. 12224.

This legislation, if enacted, would strengthen allotment and marketing quota provisions relative to peanuts. It would prevent additional farms from qualifying as "old farms" by producing excess peanuts and, thus, would prevent continued reduction in the farm allotments for established peanut producers.

I understand that a prior hearing on this proposal has been conducted by this committee and that representatives of the Oils and Peanut Division, CSS, testified in favor of its enactment.

Our position remains unchanged: We favor enactment of the proposed amendment to section 358.

Section 2 of H. R. 12224 proposes a complete revision of section 359 (b) of the act.

This is the section which has provided the so-called 1-acre exemption from the provisions of allotments and marketing quotas. Under this section 1 acre or less of peanuts may be produced and marketed without an allotment and without incurring marketing quota penalties.

The revision of this section would provide that the 1-acre exemption would apply only to those farms on which the producers interested in peanuts do not share in peanuts produced on any other farm.

Enactment of this revised section would prevent farm operators from leasing numerous small tracts for the purpose of producing 1 acre or less of peanuts on each tract. It would also prevent a farm operator from utilizing his full allotment for commercial purposes and producing peanuts on another farm under the 1-acre exemption to be used for seed purposes the next year.

In some instances, particularly in areas where high yields of peanuts are obtained, there has been some abuse of the provisions of sec

These other countries have trade responsibilities. But when we offer them rice at competitive prices in the world market, I think they will buy all of our surplus.

Now, all we have to do is to complete working out the details. The Department made a wonderful stride in disposing of our surpluses and wonderful strides in working out these programs.

I respectfully submit that we can go further than they have done simply, not to help us-we don't want help-we just want to be in a position where we know what we are doing-so that we won't have to take that risk that Mr. Dean points out of buying a cargo of rice with the anticipation of selling it over here somewhere and finding ourselves stuck with it and being under the compulsion to export it.

You see, you have to export it. You can't sell it in the domestic market. Sometimes it is very difficult to find a place to export it. When you have a large quantity on hand, that is.

Mr. GATHINGS. You mentioned the promotion of rice sales in this country. I just wondered what you think about that program in the next 5 or 10 years.

Mr. MILLER. I think that it will double the consumption of rice in the United States in the next decade. I think it will take 10 years to do it, but I think we can double the consumption, the per capita consumption of rice in the United States by a well-planned program. Mr. GATHINGS. Would that well-planned program provide for some type of checkoff. How would you think that the various segments of the rice industry should pay for such a program?

Mr. MILLER. We think there should be a checkoff; we hope that it can be finally realized. The Arkansas rice farmers are very strong in their support of promotional work. The Texas rice farmers are very strong in their support.

Mr. GATHINGS. Right.

Mr. MILLER. There hasn't been quite as much support in Louisiana, nor in Mississippi has there been as much as in Arkansas and Texas. The Arkansas people led the movement, and the Texas people were also leaders in the movement.

Now, in those areas, certainly, there is strong probability that the producers would be willing to have a checkoff system. The Louisiana people have very strenuously resisted a checkoff system. And that is where we stand today.

We are conducting educational campaigns in Louisiana areas in the hope that we can acquire, get their acquiescence, and if we can, then we would be in a position to put in a checkoff system in all probability. Mr. THOMPSON. In Texas, it is virtually a checkoff system now, isn't

it?

Mr. MILLER. It works to that effect, Congressman.

Mr. THOMPSON. It is ninety-odd percent.

Mr. MILLER. He has done a great job, yes he has, certainly has. Mr. THOMPSON. Our time is running out.

Mr. GATHINGS. If you are winding up, Mr. Chairman, I would just like to ask Mr. McLain: Do you recall receiving a letter from me recently about some negotiations with respect to rice produced in California as against southern rice?

Mr. McLAIN. Yes, sir.

Mr. GATHINGS. Time is running out and all that, but I would like to get your attitude.

Mr. DEAN. This 1,400,000 hundredweight of pearl rice is from the 1956 crop in California which is the result of the industry not moving, going ahead and putting the rice in Japan for dollars. This rice is the 1956 crop rice, and it is pearl rice. The only home normally for rice on the west coast is to Japan.

Since this crop was taken over in 1956, we have taken over, as I indicated earlier this morning, 2 million hundredweight from the 1957 crop in California, and another crop will be coming along for harvest in September. We put this 1,400,000 hundredweight up for barter, and restricted it only to the 1.4 million pearl type.

We held back Calrose rice in California because we think we can move it for dollars, as it is a long-grain rice. So what we were attempting to do by bartering this surplus rice in California was giving it equal treatment with the relatively small quantity of pearl rice which you have in the South. We think we can move the pearl rice out of the South for dollars without any help from a barter program. We e were very specific to tie down the barter program for only that quantity of price.

Mr. GATHINGS. You realize, though, by virtue of just earmarking California rice, that the ears pop up all over of these other States that grow rice?

Mr. DEAN. Mr. Carter called me the day the press release went out. He raised the same question. I pointed out to Clyde as well as I could the amount of assistance we have given to rice, not only the rice producer in Arkansas, but the rice milling industry since 1953.

So what we were attempting to do with this relatively smaller quantity in California was to give it equal treatment with the southern rice.

We look at the rice problem as a whole, not State by State. We have been paying carrying charges on this rice in California for over 2 years, and we have got to move it. So our best opportunity for attempting to move it, since we can't move it for dollars, is to try to move it for barter.

If we had the same problem in the South, on the old crop-keep in mind that in the South we have no rice from the 1953 crop. It is gone. We have no rice from the 1954 crop; it is gone.

We have no rice from the 1955 crop; it is gone. So what we have left in the South is a relatively small quantity of 1956, plus the 10

million we took over in March.

Mr. GATHINGS. We are anxious, though, to keep our customers, and we are hopeful that you will continue to look at it as a national problem, of course.

Mr. DEAN. We would say this, Mr. Gathings, that if you had some old-crop rice in the South, we would work it off either through barter, try it through barter-it is old-crop rice-that is the only reason we put it up under the barter program, because we see no other opportunity for movement, and we would certainly do that in any State where we had old-crop commodities.

Mr. GATHINGS. Whether barter or otherwise, we have tried to dispose of it and the storage is an appreciable item. In any event Mr. DEAN. The rice in California is 1,400,000 hundredweight and if it goes out of condition, which it could do, then what do we do? We throw it immediately on the domestic market for feed, and break